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MS Revenue Q4 Takes Pounding: Down 29% 1 Year Ago

by Brandon Dimmel on July, 27 2009 at 08:07AM EDT

As hype builds for its upcoming Windows 7 operating system, Microsoft continues to face declining revenue in all five of its major markets. Just last week, the Redmond-based company reported miserable results for its fiscal fourth quarter.

For the quarter ending June 30 Microsoft announced an incredible decline of 29 per cent from last year, with profits of $3.05 billion. The company's stock is also down to 34 cents per share, a decline of 26 per cent from the same period a year ago. Revenue dipped by 17 per cent to $13.1 billion. (Source: crn.com)

Decay Beyond Wall Street Predictions

Not even Wall Street could have predicted such a fall. Analysts had estimated that Microsoft would pull in about $14.37 billion in revenue, significantly higher than the actual result. Wall Street also missed on Microsoft's stock, but not by as much -- analysts had believed it would close out June at 36 cents a share.

Similar drops affected Windows Client revenue and Microsoft's Server and Tools Division, although the latter experienced a comparatively meager decline of just 6 per cent. Still, it's not cause for celebration. (Source: informationweek.com)

Why so much Decline?

Many insiders are, and have been for some time, blaming netbooks, the tiny but incredibly efficient mini-PCs available for lower prices that offer Microsoft lower profits. The big gamble this fall will be Microsoft's attempt to put Windows 7 on netbooks for significantly more money (perhaps $30 or so more than they charge OEMs for XP), which could help stabilize profits or, in the worst case scenario, drive consumers to Linux-based competitors.

Let these results act as proof of one thing: there is a heck of a lot riding on Windows 7, which hits stores October 22.